Task 1: Examining Sustainability Certification of Bioenergy

Transcription

1

2 Strategic Inter-Task Study: Monitoring Sustainability Certification of Bioenergy A cooperation between IEA Bioenergy Task 40, Task 43 and Task 38 Task 1: Examining Sustainability Certification of Bioenergy A study commissioned by IEA Bioenergy February, 2013 Liesbet Goovaerts, VITO, Belgium Luc Pelkmans, VITO, Belgium Chun Sheng Goh, Utrecht University, the Netherlands Martin Junginger, Utrecht University, the Netherlands Jamie Joudrey, University of Toronto, Canada Helena Chum, National Renewable Energy Laboratory, USA C.T. (Tat) Smith, University of Toronto, Canada Inge Stupak, University of Copenhagen, Denmark Annette Cowie, University of New England, Australia Lena Dahlman, Swedish Bioenergy Association, Sweden Oskar Englund, Chalmers University of Technology, Sweden Alison Goss Eng, US Department of Energy, USA

3 Strategic Inter-Task Study: Monitoring Sustainability Certification of Bioenergy At present numerous biomass and biofuel sustainability certification schemes are being developed or implemented by a variety of private and public organisations. Schemes are applicable to different feedstock production sectors (forests, agricultural crops), different bioenergy products (wood chips, pellets, ethanol, biodiesel, electricity), and whole or segments of supply chains. There are multiple challenges associated with the current status of sustainability certification, i.e. the proliferation of schemes has lead to to name a few confusion among actors involved, market distortion and trade barriers, an increase of commodity costs, questions on the adequacy of systems in place and how to develop systems that are effective and cost-efficient. Within IEA Bioenergy a strategic study was initiated among Tasks 40, 43 and 38 to monitor the actual implementation process of sustainability certification of bioenergy. The study was executed between January 2012 and February Its main goals were to evaluate how stakeholders are affected by certification initiatives, quantify the anticipated impact on worldwide bioenergy trade, assess the level of coordination among schemes, and make recommendations to remove barriers which may depress markets and reduce sustainable trade. A worldwide survey was launched to investigate the operational experiences of people actively involved with any aspects of bioenergy production systems, including those engaged in biomass feedstock production, conversion into primary and secondary biofuel and bioenergy products, markets and trade. The survey placed a particular focus on the input of stakeholders on how systems can be improved to be more effective. Many people have responded - we have received over 200 survey responses, from all over the world. The study has produced four reports, which are available on-line on the IEA Bioenergy website, and the sites of the participating tasks*: - Task 1: Examining sustainability certification of bioenergy - Task 2: Survey on governance and certification of sustainable biomass and bioenergy - Task 3: Impacts of sustainability certification on bioenergy markets - Task 4: Recommendations for improvement of sustainability certified markets On Tuesday 12 March 2013 the main outcomes of the study were presented in a workshop, in connection to the World Biofuels Markets in Rotterdam. * (Task 40, Sustainable Bioenergy Trade) (Task 43, Biomass Feedstocks for Energy Markets) (Task 38, Climate Change Impacts) The authors would like to gratefully acknowledge the IEA Bioenergy Executive Committee for providing funding to make the project possible. We would especially like to thank the interviewees and the respondents of the survey, for providing thoughtful and engaging answers, and helping to move the discussion beyond the identification of problems, toward solutions.

4 Table of Contents 1 Introduction Approach Current regulatory sustainability requirements European Union... 8 The European Renewable Energy Directive (RED - Directive 2009/28/EC)... 8 EU Member States selected examples United States US Renewable Fuel Standard (RFS-2) The California Low Carbon Fuel Standard (LCFS) Introduction to voluntary certification systems Selecting certification schemes for further analysis Characteristics of selected voluntary schemes Standard setting and governance mechanism Chain of Custody standard Information handling Assessment procedures Relation with policies and other schemes Key conclusions List of literature List of abbreviations Disclaimer This report was written for IEA Bioenergy. The sole responsibility for the content of this publication lies with the authors. It does not necessarily reflect the opinion of the IEA or the members of the IEA Bioenergy Implementing agreement. IEA Bioenergy has reviewed and approved this report, but is not responsible for any use that may be made of the information or opinions contained therein.

5 1 Introduction In recent years the bioenergy market has increased in importance, and international trading of biomass feedstocks and biofuels has expanded. There is also an increased awareness of the importance that the production of biomass feedstock and biofuels be sustainable. In order to ensure that bioenergy is developed in an environmentally, economically and socially sustainable way, a range of policy instruments can be used to require or promote good practices throughout the supply chain. Establishing certification schemes is one of the strategies to ensure that bioenergy is produced in a sustainable manner and is often thought to be the most suitable instrument for the development of sustainable bioenergy systems (Ladanai S., Vinterbäck J., 2010). At present, numerous sustainability certification systems have been developed, on national and international level. These certification systems differ in many ways: not only are they developed by different organisations, they have also developed to serve many different feedstocks (e.g. forests, agricultural crops), bioenergy products (e.g. relatively unprocessed forest residues, ethanol, biodiesel, electricity), and to apply to whole or segments of the supply chain (e.g. production system, chain of custody from growers to energy consumers). Recently several articles and reports have examined and compared a number of existing sustainability initiatives and policies. The overview of sustainability standards and biomass and bioenergy certification systems prepared by Van Dam et al. (2010) shows the wide range of initiatives that exist, and indicates differences and similarities between selected initiatives (EC-RED, US-RFS, RTRS, RSPO, BSI, RSB, ISCC, NTA8080, RTFO, SAN, FSC, GlobalGAP and CERTFOR) with regard to the sustainability principles, and how verification and monitoring is included anno 2009 (i.e. GHG calculation methodologies). Scarlat and Dallemand (2011) have also assessed the main roundtable initiatives (RSPO, RTRS, Bonsucro, RSB, CSBP, GBEP and ISO) and EU sustainability requirements for biofuels and bioenergy certification (EU-RED, UK-RTFO, Cramer criteria, ISCC and CEN) by comparing sustainability principles covered and chain-of-custody systems in place or under development (anno 2009). In a study from DG Energy (2011) a comparative analysis has been made of the sustainability criteria in national regulations from EU Member States that link with the use of biomass for bioenergy, 4 voluntary schemes (NTA8080, Laborelec, DRAX, GGL and Swan) and the Renewable Energy Directive (RED). Stupak et al. (2011) presents an overview of existing sustainable forest management processes and certification schemes (FSC and PEFC), and reviews how they are developed and address sustainable production of forest fuels. The FAO project Bioenergy and Food Security Criteria and Indicators (BEFSCI) provides a series of papers and studies. A recent Compilation of Tools and Methodologies to Assess the Sustainability of Modern Bioenergy is a good source of tools and methods, from a global viewpoint, for environmental and socioeconomic dimensions (FAO, 2012). The BEFSCI web site lists more examples of government frameworks, voluntary standards, and scorecards for bioenergy sustainability. Another review of existing frameworks and activities on bioenergy sustainability was prepared as the Global Bioenergy Partnership (GBEP) with 23 partner countries and 13 international organizations participants, along with 23 observer countries and 11 observer international organizations as they reached consensus on globally acceptable principles and 24 indicators for sustainability regarding the production and use of broadly defined modern bioenergy, including biofuels. GBEP-developed indicators provide policymakers and other stakeholders with a set of analytical tools that can inform the development of national bioenergy policies and programs, and provide tools for monitoring the impact of these policies and programs, which are expected to be rolled up to the country level. The indicators are being shared with developing countries envisioning the development of biofuels and bioenergy (Working Group on Capacity Building) so that this knowledge can guide the development of their

6 programs along with the understanding of the measuring tools to assess these programs in the future and set possible course corrections. ( These recent reports give an overview of the variety of certification schemes that exist and how they address the sustainability of biomass feedstocks and bioenergy production. They all conclude that to evolve to a sustainable bioenergy production the harmonisation of definitions and calculation methodology is needed, and that a unified framework of ecological, social and economic criteria is recommended. To ensure sustainable biomass, biofuel and bioenergy production also effective and efficient implementation and verification systems need to be in place, e.g. management, tracking and auditing procedures. The reports mentioned above did not elaborate deeply on these aspects as for some of the initiatives these procedures were not yet in place. They do however indicate that implementation and verification of sustainability standards is complicated and not straightforward considering the differences in definitions, criteria and indicators and calculation methodologies. Also standard setting and governance mechanisms are covered less comprehensively in the literature. Within this context, the overall objective of this task is to elaborate further on the standard setting, implementation and verification of these sustainability certification initiatives. We will examine the various approaches of selected sustainability schemes for agriculture, forestry, biomass, biofuels and bioenergy and their practical applicability; what type of tracking procedures are in place (Chain-of Custody standards), how do they ensure sustainability. This task focuses on initiatives which are having, or are expected to have, an important impact on the bioenergy market. Major initiatives are for example those approved by EU, national systems in countries with high bioenergy use, or relatively high imports or exports of biomass and biofuels. The schemes mentioned in this report are among the best known, but many other exist. The comparisons presented here are not intended to be comprehensive but rather provide illustrative examples of how existing schemes and initiatives have been and are being implemented. This should to provide the reader with an overview and a clearer picture of how these schemes work, and how they are similar or different, and how they are interlinked. In addition, most of these systems have continuous improvement practices built in and evolve over time.

7 2 Approach The work is built upon global reviews of certification developments published by Task 40 (van Dam et al. 2010), Task 43 (FAO 2010, Lattimore et al. 2009, Stupak et al. 2011), and updated where necessary with insights from Task 40, Task 43 and Task 38 experts. Similar assessments and evaluations have been performed by other institutes, i.e. most recently by NL Agency (May 2011, March 2012). Our analysis does not go into detail on the sustainability criteria as such, since this has already been dealt with in just mentioned reports and articles, but our work examines and refines the analysis and compares the results with findings in the mentioned studies (see 1). Information on the Americas was built on the work of the U.S. Department of Energy sustainability analysis and bilateral activities with Brazil, and significant global publications including this topic. 1 The work was approached in the following steps: 1. Discussion of legislative frameworks (see 3); 2. An introduction to voluntary certification systems (see 4); 3. Selecting specific certification schemes for analysis ( 5): 4. Detailed analysis of selected schemes using a structured template to identify general aspects ( 6): o Standard-setting and governance o Chain of Custody o Information handling along the supply chain o Assessment procedures o Relation with policies and other schemes 5. Discussion of key conclusions based on the review of the characteristics and relationship of the selected certification schemes ( 7). 1 See, for instance, sustainability activities; REN21. Renewables 2012 Global Status Report. Paris: REN21 Secretariat, 2012; Chum, H.; Faaij, A.; Moreira, J.; Berndes, G.; Dhamija, P.; Dong, H.; Gabrielle, B.; Goss Eng, A.; Lucht, W.; Mapako, M.; Masera Cerutti, O.; McIntyre, T.; Minowa, T.; Pingoud, K. 2011: Bioenergy. In O. Edenhofer et al. eds. IPCC Special Report on Renewable Energy Sources and Climate Change Mitigation. Cambridge, UK, and New York, NY: Cambridge University Press; Global Energy Assessment. 2012: Toward a Sustainable Future. Cambridge, UK, and New York, NY: Cambridge University Press; and the International Institute for Applied Systems Analysis, Laxenburg, Austria, 2012.

8 3 Current regulatory sustainability requirements The interest in biofuels and bioenergy production and investment has been largely driven by the policies of national governments, both in developed and developing countries, designed to reduce greenhouse gas (GHG) emissions. The intense debate on food versus fuel and on the environmental impact of large scale production of biofuels has triggered the development of schemes to account for and monitor sustainability issues intended to reduce the negative unintended consequences of GHG related policies. A number of countries have already been actively engaged in the development of sustainable biomass, biofuels and bioenergy standards, including e.g. Belgium, the Netherlands, Germany, the United Kingdom, Switzerland, US, Canada, Australia, New Zealand, Korea, Japan, Brazil, India, China, Thailand, Argentina, Philippines, and South Africa. A comprehensive overview of these initiatives can be found in the publication of Scarlat and Dallemand (2011) and van Dam et al. (2010). These countries have adopted policies that encourage the production and use of bioenergy, mostly related to biofuels, and have set sustainability requirements for production, processing and trade of biofuels, bio-liquids and/or solid biomass which must be fulfilled in order to meet present national targets and/or to be eligible for financial support. The most important policies are those developed by the European Commission and US as these have the greatest impact on large international bioenergy market. 3.1 European Union The European Renewable Energy Directive (RED - Directive 2009/28/EC) The main legislative driving force for sustainability of biofuels and bioenergy in the European Union is the Renewable Energy Directive (2009/28/EC). The aim of this legislative act is to achieve by 2020 a 20% share of energy from renewable sources in the EU's final consumption of energy and a 10% share of energy from renewable sources in each member state's transport energy consumption. To achieve these objectives, the directive established, for each member state, a mandatory national target for the overall share of energy from renewable sources in gross final consumption of energy. This target was set on the basis of the different starting points of the various countries. The 10% target for the transport sector was set at the same level for each member state, in order to ensure consistency in transport fuel specifications and availability. The RED has set specific minimum sustainability standards for biofuels (for transport) and bioliquids (for electricity and heat production) and requirements for their verification that should be met in order to receive government support or count towards the mandatory national renewable energy targets. The sustainability criteria are: Minimum greenhouse gas (GHG) savings of at least 35% compared to fossil fuel (to be increased up to 50% from 2017 and 60% for new installations from 2018), no raw material from land with high biodiversity value, such as primary forest, nature protection areas, highly biodiverse grasslands (unless it can be shown that biomass extraction is part of management regime compatible with - or a requirement for - high biodiversity), no raw material obtained from converted 2 high carbon stock land (continuously forested areas, wetlands or peatlands), 2 Converted, according to the RED = land that had the status of continuously forested areas, wetlands or peatlands in January 2008 and no longer has that status.

9 Cross compliance: raw materials in EU must be cultivated in accordance with the EU Common Agricultural Policy (with subsidies for producers for biofuels feedstocks). The compliance to these biofuel sustainability requirements needs to be checked by Member States or through voluntary schemes which have been approved by the European Commission (EC) 3. The EU Member States must also report to the EC on biannual basis on the impact of biofuels and bioliquids on biodiversity, water resources, water and soil quality, GHG emission reduction and changes in commodity prices and land use associated with biomass production. The RED in itself did not include any definite set of definitions, criteria and indicators related to terms such as "primary forest" and "highly biodiverse grasslands" requiring that these be further examined and defined as part of a comitology process at EU level. On 17 October 2012, the EC published a proposal to limit global land conversion for biofuel production, and raise the climate benefits of biofuels used in the EU 4. The proposal contains four major changes: - Incorporation of biofuels produced from food crops (cereals, sugar and vegetable oil) would be limited to 5% in terms of energy content out of the target of 10% of renewable energy in transport by 2020, - New biofuel plants (post 1st July 2014) should deliver minimum greenhouse gas savings at 60 % compared to fossil fuels emissions, - Additional support is introduced for "advanced" biofuels produced from non-food feedstocks, such as waste, straw and non-food crops, by weighting more favourably their contribution towards the 10% renewable energy target, - The estimated GHG emissions associated with indirect land use changes (iluc) needs to be reported by Member States and fuel suppliers based on using fixed factors 5. The high iluc value for oil crop biofuels puts a high constraint on the role of biodiesel from oil crops after The EC also expresses the view that in the period after 2020 biofuels produced from food and feed crops, which do not lead to substantial greenhouse gas savings (when iluc emissions are included), should not be subsidised. So far the RED sustainability requirements do not apply for solid or gaseous biomass used for electricity or heat production. However, feedstocks used for the production of solid and gaseous bioenergy carriers (notably lignocellulosic biomass) are expected to also be used for the production of 2 nd generation biofuels, which will have to comply with the requirements set for biofuels and bioliquids. It is therefore expected that common requirements or some form of harmonization will be needed. In February 2010, the EC published a Communication 6 stating that for the moment, there would be no binding criteria at the European level. However, the EC provided a number of recommendations for Member States in order to ensure greater consistency and to avoid unwarranted discrimination in 3 Since 19 July 2011, the EC has recognised voluntary schemes for biofuels, applying directly in the 27 EU Member States: ISCC, Bonsucro, RTRS, RSB, 2BSvs, RBSA, Greenergy, Ensus, Red Tractor, SQC, Red Cert, NTA8080, RSPO. 4 COM(2012)595, Proposal for a Directive of the European Parliament and of the Council amending Directive 98/70/EC relating to the quality of petrol and diesel fuels and amending Directive 2009/28/EC on the promotion of the use of energy from renewable sources. October Current iluc emission factors are 12 g CO2eq/MJ for cereals, 13 g CO2eq/MJ for sugars and 55 g CO2eq/MJ for oil crops (for reference, the fossil fuel comparator is 83.8 g CO2eq/MJ). Biofuels made from feedstocks that do not lead to additional demand for land, such as those from waste feedstocks, should be assigned a zero emissions factor. 6 COM(2010)11, Report from the Commission to the Council and the European Parliament on sustainability requirements for the use of solid and gaseous biomass sources in electricity, heating and cooling. February 2010.

10 the use of raw materials. Basically, it recommended the use of a similar methodology as that for biofuels for installations larger than 1MW, with the same sustainability requirements on biodiversity and high carbon stock land and a common GHG calculation (with adapted reference as the end use needs to be included as well). The EC is in the process of assessing the implementation of its recommendations to Member States, and the opportunity to have binding EU-wide criteria for solid and gaseous biomass. EC recommendations are expected to be released in EU Member States selected examples In 2006, the German Ministry launched a project aimed at defining the basis for sustainability requirements for biofuels. The result was the proposed Biomass Sustainability Regulation (BSR). The draft BSR was released in late 2007, but with the RED in development at EU level, the initiative was abolished. Nevertheless, in the early stages Germany decided to follow the RED requirements and it was the first country to implement the sustainability requirements of the RED in their own legislation. Germany also supported the development of a scheme called ISCC (International Sustainability and Carbon Certification). This system was the first to be recognized at the national level to fulfil the RED requirements (in 2010). A second system, the REDcert, was also recognized later in Germany (Lieback, 2011). In 2015 Germany will change from volume quota to CO 2 -quota for biofuels. This will put higher emphasis on the GHG balance of biofuels (to be certified), with important economic impact. Belgian authorities (at regional level) introduced sustainability criteria into their supporting scheme for renewable electricity in In the Flemish region, certain biomass streams (e.g. wood (waste) that is still suitable for recycling in board or pulp and paper industry) are not entitled to receive green power certificates as a feedstock for the production of renewable electricity. Also, the energy used for transporting and pre-treatment of the biomass, is deducted from the green power certificates. In the Brussels and Walloon regions, a greenhouse gas balance and reduction compared to the best available natural gas system is calculated to determine the amount of green certificates. All calculations must be validated through an audit by an independent organisation. Since April 2008, under the UK RTFO (Renewable Transport Fuel Obligation), the Renewable Fuels Agency (RFA) requests fuel suppliers to report on the specific type and origin of biofuels, the compliance of biofuel crops with existing environmental and social sustainability criteria, and the greenhouse gas emission reductions achieved by using biofuels. While there are no strict consequences of not meeting the sustainability criteria, public disclosure may be an important driver for the reporting commercial companies. A similar procedure was implemented for renewable electricity in From 2011, a well-founded report on the RED sustainability criteria is required for installations larger than 50kWe; from 2013, generators of 1MWe and above will need to actually satisfy the sustainability criteria. This staged approach will also be considered by the Renewable Heat Incentive (RHI). The Netherlands examined sustainability criteria for all forms and applications of biomass. In 2007, the Cramer Commission published a list of sustainability principles for the use of biomass for energy (fuels, liquids, solid and gaseous). These principles are partially covered in the RED sustainability criteria. The Netherlands are building further on their experience with the Corbey Commission. Based on the Cramer principles, the Dutch normalisation institute NEN, developed standards NTA 8080 and 8081 for sustainable biomass for energy purposes. This is a voluntary system and already used by commercial actors to demonstrate the sustainability of their biomass. The NTA 8080/81 was recently approved by the European Commission as a voluntary system for biofuels and bioliquids.

11 In October 2012, large Dutch biomass users have signed a Green Deal. The participating companies will report annually to the government the amounts of biomass they use and how sustainability is demonstrated via certification or verification systems. 3.2 United States US Renewable Fuel Standard (RFS-2) The US Renewable Fuel Standard (RFS) uses a different approach. The RFS-2 defines the volume of different biofuels that have to be blended with conventional fuel between 2006 and 2022 according to the U.S. Energy Independence and Security Act of The total volume of biofuels mandated in the Renewable Fuels Standard increases biofuel use in the US to 36 billion gallons (136 billion litres) by Although the law has prescribed volumes up to 2022 totalling 36 billion of renewable fuels, the law sets a limit of 15 billion gallons for conventional renewable fuel, and 21 billion of advanced biofuels including 1 billion gallons of biomass-based diesel, 4 billion of non-cellulosic advanced fuel (e.g., Brazilian sugarcane ethanol), and 16 billion of cellulosic biofuels (60% GHG emission reduction). On a yearly basis, the EPA has the ability to waive the volumes of the advanced biofuels based on the market ability to produce them. Only a quarter of these advanced biofuels can be made from food crops, and the rest, 16 billion of 21 billion gallons, must be cellulosic biofuels made from agricultural waste, fast-growing woody species and herbaceous grasses, and other sources of waste biomass. This transition away from food-based fuels is essential to managing the conflict between food and fuel, and it is why the success of the RFS is so critically tied to the commercialization of cellulosic nonfood biofuels. The first commercial cellulosic biofuel facilities are coming on line in 2012, with larger ones following in 2013 and The RFS2 requires that each category of renewable fuel emits fewer greenhouse gases than the petroleum fuel it replaces, and sets restrictions on the type of feedstock used and the types of land that can be used to grow and harvest the feedstock. It sets restrictions on GHG emissions which must be less than the lifecycle GHG emissions of 2005 baseline average gasoline or diesel fuel that it replaces. Each year, obligated parties such as refiners and importers of gasoline and diesel and blenders are required to meet these volumetric targets for four broad categories of biofuels: (1) conventional renewable fuels, (2) bio-based diesels, (3) advanced biofuels, and (4) cellulosic biofuels. These biofuels categories are defined based on the nature of feedstock/technology used in production and minimum GHG reduction thresholds obtained. The minimum GHG reduction thresholds that must be reached to qualify as conventional renewable fuel (or grandfathered), noncellulosic advanced biofuels, biomass-based diesel and cellulosic biofuel are 20%, 50%, 50% and 60%, respectively. These requirements favour the development of highly efficient biofuel technologies, including second-generation biofuels. The definition (requirements) of renewable biomass limits the types of biomass as well as the type of land from which biomass may be harvested to produce compliant renewable fuels. 7

12 US renewable fuel producers have reporting obligations based on default values established per feedstock. EPA established these default values based on feedstock and processing pathways (including waste and residue streams), so-called specific fuel pathways. Assessment of lifecycle GHG emissions is necessary to determine which fuel pathways meet the GHG reduction thresholds under RFS2 for the four required renewable fuel categories. Classifications of approved fuel pathways are specified in the RFS2 regulations. Three critical components of a fuel pathway are listed: (1) fuel type, (2) feedstock, and (3) production process. Each specific combination of the three components, or fuel pathway, is assigned a RIN D code designating the renewable fuel category (renewable fuel, biomassbased diesel, advanced biofuel, cellulosic biofuel) for which it qualifies. For example, biodiesel is assigned a RIN D Code of 4, which qualifies the fuel for compliance with the biomass-based diesel category. The US has hence adopted a direct legislative approach not relying on voluntary certification schemes. At the same time, US legislation confirms the global trend of increasing importance of sustainability in the biofuel market (Agency NL, May 2011). The California Low Carbon Fuel Standard (LCFS) State-level legislation in the US, such as the California s Low Carbon Fuel Standard, is also largely based upon reporting requirements using default carbon intensity values established per type of biofuel. The California Low Carbon Fuel Standard (LCFS) is a standard which aims to reduce GHG emissions from the transportation sector in California by at least 10 percent by 2020, using a technology-independent lifecycle approach. So liquid and gaseous fuels, electric and hybrid vehicles, and other combinations can be used to reach the legislated reductions. Fuel producers and fuel purchasers (bundlers for resale) require that the fuel pathway be register and can mix a variety of sources to reach a needed level. Carbon intensity (CI) is a calculated for specific categories of transportation fuels and its substitutes (such as biofuels using a modified for California GREET methodology with data provided by the fuel producer) that takes into account the lifecycle greenhouse gas emissions (GHGs), including indirect emissions associated with production and transportation. The California Air Resources Board (CARB) calculates current carbon intensities of various fuel pathways and sub-pathways as listed in tables - called lookup tables - and each additional facility and pathway approved is then found in the registered facility information ( which is added to other already registered fuels. The LCFS convened a working group relative to the iluc factor and this factor will be modified in legislation in the future. ( ). In general these (supra)national regulations focus on the environmental and ecological issues related to biofuel production, such as: the climate change mitigation potential of biofuels by requiring a certain percentage in reduction of lifecycle GHG emissions compared to a fossil-based fuel, and; preservation of existing organic carbon stores and biodiversity by stating that biofuels cannot be made from feedstock obtained from land with high carbon stock or high biodiversity value.

13 The advantage of these national/regional standards is that they are well tailored to local/regional issues. However, these initiatives are not comparable with regards to the overall structure, definitions used, specific sustainability requirements, reporting methodology and reporting requirements; for example there are differences in the type of biomass/biofuel/bioliquids included, time frame, GHG emission reduction requirements, the GHG emission reduction calculation methodology and the way ILUC is incorporated. As a result, this situation can be confusing to actors in the marketplace and lead to barriers for international trade. 4 Introduction to voluntary certification systems Voluntary standards and certification systems have existed for decades to affirm product safety, quality, and production practices. In the 1990s, forest certification became one of the first large-scale applications addressing a number of global social, economic, and environmental challenges. With the increase in production and use of biofuels and bioenergy in response to, among other things, climate change mitigation, sustainable development and security of energy supply, there has been a dramatic increase in the number of sustainability initiatives developing worldwide. Sustainability certification exists for a wide range of products. Such systems set standards for sustainable or responsible management practices and generally include a number of principles, criteria and indicators against which compliance is verified. In recent years, mandated targets and financial incentives for biofuels and bioenergy have been set at international and national levels to provide certainty and some economic security for investors. This has driven the rapid industry expansion globally. The rapid scaling up of the bioenergy industry has led to a public debate in the past years on the potential unsustainable consequences of biomass use for energy. This has triggered many countries, international organisations and industry bodies to develop bioenergy sustainability systems. These groups adopted governance systems as known from forestry certification systems: standard-setting by representatives of social, environmental, and economic interests, third party certification and auditing by accredited certification bodies, that issue certificates when the standards had been met. One of the goals of the advent of bioenergy certification schemes was to generate enough demand for standards-compliant products so that certification would become a de facto condition for market access. At the core of each certification system is the standard - a defined set of social, environmental, and/or economic principles. Standards systems determine who has a voice in setting the standard, how it evolves over time, who audits, verifies and certifies compliance, who accredits the certifiers, and how compliance is demonstrated, with corresponding effects on legitimacy and credibility, costs and benefits, and effectiveness to achieve goals. These certification systems are in many ways similar with regard to the sustainability issues/principles they cover, but there is a variation in the way these principles are measured, i.e. different criteria and indicator systems and different monitoring procedures exist to guarantee sustainability. Although there are many variations in the structure of standards and certification systems, most systems include the same basic components carried out by a similar set of organizations (Figure 1

14 illustrates this model)(steering Committee of the State-of-Knowledge Assessment of Standards and Certification, 2012). - The standard setter is responsible for setting the standard and often has responsibility for the management of the standards system. A variety of stakeholders are often engaged directly in the governance of the standard setter. - A certification body is responsible for making decisions about compliance based on the results of audits, i.e., reviews or assessments to confirm whether the practices or services established to meet the standard are being implemented. Auditors often work for certification bodies and are responsible for carrying out the audits. There are normally two types of audits; the first audits leading to issuing of the certificate, and the subsequent annual audits to maintain the certificate. Usually, the certificate must be renewed after some years, resulting in a new major audit to renew the certificate. - The accreditation body is responsible for evaluating the competence of the certification body and the auditors. Figure 1. General model of a certification system (Steering Committee of the State-of-Knowledge Assessment of Standards and Certification, 2012)

15 A variety of schemes has become operational for the production, processing and trade of biomass, with the most prominent ones relevant for bioenergy markets being: - Forest certification systems: The first implemented forest certification scheme was the Forest Stewardship Council (FSC). The FSC sets international principles for sustainable forest management, and local stakeholders develop region-specific standards. Other schemes followed, with PEFC as one of the larger recognised international certification organizations endorsing national-level schemes based in more than 30 countries. In general, each of these PEFC schemes differs in how sustainable forest management is defined, but our review indicates they seem to have somewhat similar chain-of-custody standards, although some differences can be found. The PEFC has not mandated one set of international principles but does have a mechanism for evaluating if schemes seeking PEFC endorsement are in compliance with a harmonized set of standards. While FSC and PEFC schemes are used to certify the sustainable management of forests from which bioenergy feedstocks are harvested, neither were originally developed for biofuels/bioenergy applications. These schemes also do not include binding limits for GHG emissions, nor do they include the complete production chain or quality of air issues. They do address water and soil quality/conservation, and include biodiversity and workers and land rights. - Agricultural certification systems: Most of these systems are designed for the certification of organic products to be used for a wide range of end-uses (food, feed, energy), like SAN/RA and GlobalGAP. Some focus on a specific crop, like RTRS (soy), RSPO (palm oil) and Bonsucro (sugar cane). As for forestry certification, these agricultural schemes include environmental, economic and social aspects; soil conservation is addressed in all schemes; and air quality is only covered in RSPO and social aspects (workers rights and land rights) are not included in GlobalGAP. The crop specific schemes, RTRS, RSPO and Bonsucro, have recently been extended to also include specific biofuels or bioenergy related issues, i.e. GHG emissions and carbon conservation, so that they are recognized as voluntary scheme for biofuels by the European Commission. - General biofuel/bioliquids certification systems: A number of dedicated certification schemes for biofuels/bioliquids exist (e.g. ISCC, RSB, REDCert, 2BSvs). Most of them have been developed to show compliance with the European RED requirements. These are more generic standards which cover a wide range of feedstocks to be used for biofuels or bioliquids. They cover the same aspects as the crop dedicated agricultural schemes, although the approach differs; for example, these schemes require a specific GHG reduction target compared to fossil fuel instead of general GHG improvement requirements. On the other hand they generally exclude requirements on e.g. fertilizer applications, tillage, labour conditions and so on. - Wood pellet certification systems: The first private standards for wood pellets for energy production included the Green Gold Label (GGL) and the Laborelec system, which were developed to comply with (anticipated) national legislation and customers demand. These are mainly Chain-of-Custody (CoC) standards for product verification. They allow the use of other schemes to comply with the sustainability criteria set out in the standard (e.g. FSC, PEFC, including e.g. CSA, SFI). Currently a consortium of large pellets buyers have formed an initiative called International Wood Pellet Buyers (IWPB) to streamline their quality and sustainability requirements to facilitate trade within the sector.

16 5 Selecting certification schemes for further analysis This chapter focuses on a selection of the most relevant voluntary certification schemes and initiatives to address sustainable biomass, biofuels and bioenergy. It examines how these schemes work/or are supposed to work in practice and identify similarities and differences between them to develop an understanding of the benefits and opportunities that exist among the systems. Our criteria for relevance were schemes having, or potentially having, an important impact on the biomass, biofuel or bioenergy market. The list of certification schemes were selected in consultation with the IEA Bioenergy Task 40, 43 and 38 members involved in this project. To select the schemes, a comprehensive spreadsheet with information on all known existing relevant systems and initiatives was compiled. We included existing schemes and schemes under development to guarantee the sustainability of forestry, agricultural production, biofuels and bioenergy. The following aspects were taken into account when selecting the most relevant schemes: - the amount and type of traded feedstock/commodities for energy, covering different supply regions and demand regions, and different types of feedstock. - the international importance of schemes in the production of these feedstocks. The most important feedstocks in terms of trade flows for energy are: - Sugarcane for ethanol: o supply region: Brazil o demand regions: Brazil, US, EU - Soy for biodiesel o Supply regions: Argentina, Brazil, US o Demand regions: Brazil, US, EU - Palm oil for biodiesel o Supply regions: South-East Asia (Malaysia, Indonesia) o Demand: EU - Rapeseed for biodiesel o Supply regions: EU, Canada o Demand: EU - Wood for pellets, wood chips o Supply regions: Canada, US, Russia, EU, potentially also South-America and Africa o Demand regions for energy: EU, North-America, East Asia (China, Japan, Korea) Based on this analysis, the following schemes are selected: - FSC (forestry) with focus on differences by region - PEFC endorsed schemes (forestry): o SFI, CSA, ATFS in North-America o PEFC Finland, Sweden, Germany or France in the EU o CertFor (Chile), CerFlor (Brazil) in South America o FCR (Russia) - GlobalGAP (several agricultural crops) - SAN/RA (several agricultural crops) - CSPB (agricultural biomass) - Bonsucro (sugar cane) - RSPO (palm oil) - RTRS (soy) - 2BSvs (biofuels)

17 - ISCC (biofuels) - RSB (biofuels) - IWPB (International Wood pellet Buyers consortium), which also covers a discussion on the systems of Electrabel (Laborelec) and Essent (GGL). To allow for comparison of these schemes a detailed factsheet was produced for each scheme.

18 6 Characteristics of selected voluntary schemes The selected schemes are analysed and discussed with regards to four topic areas: - Standard setting and governance mechanism; - Chain of Custody standard; - Information handling; - Assessment procedures; - Relation with policies and other schemes. Where appropriate, the results are organised in tables allowing for a quick and easy comparison of the different schemes against each other. 6.1 Standard setting and governance mechanism Standard setting involves consultation processes and participation of interested stakeholders to decide on the content (e.g. which ecological, social and economic principles and criteria to include) and structure (e.g. whether standard sets performance requirements or management practices) of the standard. The content of the certification schemes is dependent on the interests and motivation of the actors involved, their values and the balance between them. Generally two types of governance structures are used: a membership-elected governance body or an appointed, representative governance body. Both types have strengths and limitations. The election of governance bodies by members is the most democratic, and all stakeholders are represented in the process if no limits exist on becoming a member. The appointed governance structure can include representation from key stakeholders, but sometimes not all stakeholders have the feeling of being involved or having a voice in the process. Besides a core governing body most standards have technical working groups or committees that are responsible to work on specific themes or issues related to the implementation of the standard. In the development of schemes and standards for forestry certification three types of stakeholder are generally involved: organizations or persons, who represent mainly environmental, social or economic values. Their motivations to develop certification systems could typically be concern for natural resources and human beings dependent on or involved in managing them, and access to green markets. These schemes provide the opportunity for the public to participate in the standard setting procedure, where any person can submit comments to the new or revised standard. Members of the governance bodies are elected, ensuring a balance between the major stakeholder groups. GlobalGAP standards are developed by Sector Committees. Any member of GlobalGAP can apply to be a Member of the Sector Committee that is constituted by six GlobalGAP suppliers and six GlobalGAP retailers elected by members. Similarly to forest certification systems, public consultations take place, with standards being revised according to the received comments as decided by the Sector Committee. SAN standards are set by an independent International Standard Setting Committee that is composed by stakeholder from different groups (producer, industry, NGO, academic, government). The Committee Members are elected for 2 years by consensus by SAN's board of directors, which are again members elected for a three year period by the General Assembly. The crop specific schemes, Bonsucro, RSPO and RTRS, are multi-stakeholder initiatives dedicated to reducing environmental and social impacts of the production and processing of the specific crops - sugar cane, palm oil and soy- and promote sustainable growth and use. In general three stakeholder

19 groups are involved: producers, industry and trade. Bonsucro and RSPO also involve NGO s. The initiatives are governed by an Executive Board which is elected by the General Assembly, or participating members, to ensure a balanced representation of stakeholders involved. In general, the technical working groups are at the heart of the standard setting. They draft proposals which are commented and reviewed by the stakeholders involved. RTRS and RSPO invite any interested stakeholder to provide input to the standard. The development of the biofuel standards ISCC and RSB started through the involvement and cooperation of a range of stakeholders representing the entire supply chain from producers to logistics and traders, including NGO s, environment and climate change policy organisations, intergovernmental organisations, consultants and research institutes. Their aim is to ensure that biofuels deliver their promises of climate change mitigation, economic development and energy security without causing environmental or social damage. In general, both standards are governed by a Steering Board, or Association in case of ISCC, equally representing each stakeholder group by election of representatives of each group. These standards are developed through an intensive stakeholder consultation process. The 2BSvs is also a biofuel schemes, but differs from the other two general biofuel standards in governance and aim. The 2BSvs scheme focuses only on the compliance with RED, and provides management, verification and audit procedures to demonstrate compliance. It is governed by a Steering Committee that is formed by members of the founding associations of French biofuel industry and the technical advisor (Bureau Veritas). No information is provided on whether other stakeholders are involved in the managing and decision-making processes. The industrial standards, GGL, Laborelec and IWPB, are initiated by utility companies. The Green Gold Label (GGL) also invites other stakeholder groups (producers, traders, end-users and NGO s) to join. The aim is to develop a sustainability scheme for solid (with focus on pellets) biomass in power plants, GLL is also applicable for chemical purposes. These schemes have different governance structures and standard-setting approach. The GGL scheme is governed by an Executive Board. The board members are elected by existing members representing at least stakeholders from primary producers, traders, end users and NGOs. Standard-setting is done through working groups representing all stakeholders involved. Laborelec is governed by Suez/Electrabel, together with Laborelec and SGS. They do not involve other stakeholders in the standard-setting. The IWPB initiative was also initiated by Suez to bring together all major biomass-firing power plants, trying to establish a common certification schemes for power production to enable the trading of industrial wood pellets among the partnering companies. The IWPB is still under developments and proposed to use the governance structure of GGL. Many sustainability standards use ISEAL Alliance s standards-setting code of good practice as a guideline for setting standards (Table 1). ISEAL guarantees that the development of criteria and indicators by its members are undertaken through a multi stakeholder, consensus-based process.

20 Table 1. Overview stakeholder representation, involvement in governance and standard-setting (plus indication of number of certificates issued dated end of February 2012) Scheme Operational date Relation to ISEAL Stakeholders involved Governance Stakeholder consultation in standard-setting Number of certificates (status end Feb 2012) Remarks 2BSvs 2011 No info The steering committee is formed by members from professional associations representing the biofuel industry in France, and Bureau Veritas as technical advisor Steering committee is in charge of the scheme and all decisions No, only French biofuel industry involved 427 Members are mainly French companies (92%) focus on EU, with worldwide import ISCC 2010 Affiliate member The ISCC association. The association is open to all interested stakeholders (agriculture, conversion, trade, logistics, end-users, NGO s and other). Governance takes place through general assembly, a board and executive board, which form the ISCC Association. Stakeholders can become a member of the association and/or contribute through technical committees and working groups. The standard is developed via stakeholder consultation stakeholders worldwide(45 countries) RSB 2011 Full member of ISEAL different type of biofuel stakeholder as follows: 1. Farmers and growers 2. Industrial biofuel producers 3. Retailers/blenders & the transportation industry Steering Board with members from the chambers who are elected by each of the individual chambers. Each chamber represent a different type of biofuel stakeholder The standard is developed via stakeholder consultation members worldwide (30 countries)